HOUSTON, Nov. 6, 2018 /PRNewswire/ -- Select Energy
Services, Inc. (NYSE: WTTR) ("Select" or "the Company"), a leading
provider of total water management and chemical solutions to the
North American unconventional oil and gas industry, today announced
results for the third quarter ended September 30, 2018.
Revenue for the third quarter of 2018 was $397.0 million as compared to $393.2 million in the second quarter of 2018 and
$153.9 million in the third quarter
of 2017. Net income for the third quarter of 2018 was
$31.3 million as compared to
$25.0 million in the second quarter
of 2018 and $2.6 million in the third
quarter of 2017. Earnings per share measured $0.29 as compared to $0.24 in the second quarter of 2018 and
$0.04 in the third quarter of
2017.
Holli Ladhani, President and CEO,
stated, "I am pleased with the execution of the Select team in
driving our best-ever financial performance on virtually all of our
key metrics. In particular, net income grew 25% sequentially and
operating cash flow was in excess of $60
million, which more than doubled our second quarter total.
We increased revenue, despite industry-specific challenges that
emerged in the latter half of the quarter, and improved margins
across all three segments of the Company. Operationally, we drove
record volumes through our GRR infrastructure system in the
Northern Delaware area of the
Permian Basin and saw positive customer reception to our recently
introduced proprietary high-viscosity friction reducer line
produced in-basin at our expanded Midland facility.
_________________________
|
(1)
"Adjusted EBITDA" is not presented in accordance with generally
accepted accounting principles in the United States ("GAAP").
Please see the supplemental financial information in the table
under "Comparison of Non-GAAP Financial Measures" at the end of
this earnings release for a reconciliation of the non-GAAP
financial measure of Adjusted EBITDA to its most directly
comparable GAAP financial measure.
|
"There has been considerable discussion in the market regarding
the transient challenges related to Permian takeaway constraints
and the degree to which operator budgets were expended over the
first three quarters of 2018. However, as 2019 budgets are put into
effect, we expect our customer base will return to investing in
U.S. unconventional well completions in 2019, as they continued
building the backlog of drilled but uncompleted wells with a steady
rig count through the third quarter up to today. Additionally, we
believe the unique dynamics of the water sector provide a greater
degree of pricing stability relative to certain other
completions-oriented services. While a temporary decline in
completions activity will affect our revenues, we believe we are
well positioned to support the progress we've made in improving our
margins over the course of the year. Given the growth we expect to
see in U.S. onshore completions activity in 2019 and beyond, we
will continue to allocate capital judiciously to create value for
our shareholders," concluded Ladhani.
Gross profit was $59.4 million in
the third quarter of 2018 as compared to $56.7 million in the second quarter of 2018 and
$19.5 million in the third quarter of
2017. Total gross margin for Select was 15.0% in the third quarter
of 2018 as compared to 14.4% in the second quarter of 2018 and
12.7% in the third quarter of 2017. Gross margin before
depreciation and amortization ("D&A") for the third quarter of
2018 was 23.0% as compared to 22.2% for the second quarter of
2018.
Adjusted EBITDA was $73.7 million
or 18.6% of revenue in the third quarter of 2018 as compared to
$68.2 million or 17.3% of revenue in
the second quarter of 2018. Please refer to the reconciliations of
gross profit before D&A (a non-GAAP measure) to gross profit
and of Adjusted EBITDA (a non-GAAP measure) to net income at the
end of this news release.
Business Segment Information
The Water Solutions segment generated revenues of $281.4 million in the third quarter of 2018 as
compared to revenues of $273.7
million in the second quarter of 2018 and $125.1 million in the third quarter of
2017. This growth was driven primarily by increased revenues
in our water sourcing and transfer operations, particularly those
associated with our GRR footprint, as well as our Flowback and Well
Testing operations. Gross margin before depreciation and
amortization ("D&A") for Water Solutions was 25.9% in the third
quarter of 2018 as compared to 25.6% in the second quarter of 2018.
Water Solutions gross margin before D&A was impacted by
$2.5 million of non-recurring
merger-related rebranding costs. We do not expect to incur material
merger-related costs after the third quarter.
The Oilfield Chemicals segment, which operates through our
subsidiary Rockwater Energy Solutions, generated revenues of
$64.0 million in the third quarter of
2018 as compared to $64.8 million in
the second quarter of 2018. Gross margin before D&A for
Oilfield Chemicals was 11.7% in the third quarter of 2018 as
compared to 9.7% in the second quarter of 2018. While revenues were
relatively flat, in line with activity, margins benefitted from the
expansion of in-basin production at Midland, improved product mix
and new contracts in our Production Chemicals service line.
The Wellsite Services segment generated revenues of $51.6 million in the third quarter of 2018 as
compared to revenues of $54.7 million
in the second quarter of 2018 and $28.8
million in the third quarter of 2017. Increased revenues in
our rentals and accommodations business line was more than offset
by declines in our Canadian operations following the closure of
three underperforming yards resulting from recent declines in
Canadian activity. Gross margin before D&A for Wellsite
Services was 20.9% in the third quarter of 2018 as compared to
19.8% in the second quarter of 2018.
Our consolidated Adjusted EBITDA during the quarter includes
adjustments for certain non-recurring items including $2.6 million of transaction costs, primarily
related to the earlier referenced rebranding efforts that are not
expected to continue after the third quarter, as well as
$1.0 million of lease abandonment
costs and $0.5 million of severance
expense, primarily related to the closure of three underperforming
Canadian yards within our Wellsite Services group. Non-cash
compensation expense accounted for an additional $2.6 million of adjustment, and other items
produced a net impact of $0.1
million.
Included in the second and third quarter of 2018 segment results
were full-quarter contributions from Rockwater Energy Solutions,
which Select acquired in November
2017; as such, these results are not included in the third
quarter 2017 results and are not directly comparable.
Cash Flow and Balance Sheet
Cash flow from operations for the nine-month period ending
September 30, 2018 was $124.6 million, of which $60.3 million was generated in the third quarter
of 2018. Higher net income and modestly improved working capital
management drove the expansion in cash flow. Capital expenditures
for the first nine months of 2018 were $100.1 million, net of asset sales of
$9.4 million, of which $41.0 million was spent in the third quarter of
2018. Both our 2018 year-to-date and third quarter net capital
expenditures were fully funded with cash flow from operations.
Total liquidity was $218.1 million
as of September 30, 2018, as compared
to $199.9 million as of June 30, 2018. Outstanding borrowings under the
Company's revolving credit facility totaled $65.0 million as of September 30, 2018, compared to $80.0 million as of June
30, 2018. The Company repaid an additional
$10.0 million on this facility
subsequent to the close of the third quarter of 2018. As of
September 30, 2018, the Company had
approximately $205.0 million of
available borrowing capacity under its revolving credit facility,
after giving effect to $20.8 million
of outstanding letters of credit. Total cash and cash equivalents
were $13.1 million at September 30, 2018 as compared to $11.3 million at June 30,
2018.
Conference Call
Select has scheduled a conference call on Wednesday, November 7, 2018 at 10:00 a.m. Eastern time / 9:00 a.m. Central time. Please dial
201-389-0872 and ask for the Select Energy Services call at least
10 minutes prior to the start time of the call, or listen to the
call live over the Internet by logging on to the website at the
address
http://investors.selectenergyservices.com/events-and-presentations.
A telephonic replay of the conference call will be available
through November 21, 2018 and may be
accessed by calling 201-612-7415 using passcode 13683114#. A
webcast archive will also be available at the link above shortly
after the call and will be accessible for approximately 90
days.
About Select Energy Services, Inc.
Select is a leading provider of total water management and
chemical solutions to the North American unconventional oil and gas
industry. Select provides for the sourcing and transfer of
water, both by permanent pipeline and temporary hose, prior to its
use in the drilling and completion activities associated with
hydraulic fracturing, as well as complementary water-related
services that support oil and gas well completion and production
activities, including containment, monitoring, treatment and
recycling, flowback, hauling, and disposal. Select, under its
Rockwater Energy Solutions subsidiary, develops and manufactures a
full suite of specialty chemicals used in the well completion
process and production chemicals used to enhance performance over
the producing life of a well. Select currently provides
services to exploration and production companies and oilfield
service companies operating in all the major shale and producing
basins in the United States and
Western Canada. For more information, please visit Select's
website, http://www.selectenergyservices.com.
Cautionary Statement Regarding Forward-Looking
Statements
All statements in this communication other than statements of
historical facts are forward-looking statements which contain our
current expectations about our future results. We have
attempted to identify any forward-looking statements by using words
such as "expect," "will," "estimate" and other similar
expressions. Although we believe that the expectations
reflected, and the assumptions or bases underlying our
forward-looking statements are reasonable, we can give no assurance
that such expectations will prove to be correct. Such
statements are not guarantees of future performance or events and
are subject to known and unknown risks and uncertainties that could
cause our actual results, events or financial positions to differ
materially from those included within or implied by such
forward-looking statements. Factors that could materially impact
such forward-looking statements include, but are not limited to,
the factors discussed or referenced in the "Risk Factors" section
of our Annual Report on Form 10-K for the year ended December 31, 2017 and in any subsequently filed
quarterly reports on Form 10-Q or current reports on Form
8-K. Investors should not place undue reliance on our
forward-looking statements. Any forward-looking statement
speaks only as of the date on which such statement is made, and we
undertake no obligation to publicly update or revise any
forward-looking statement, whether as a result of new information,
future events, changed circumstances or otherwise, unless required
by law.
WTTR-ER
SELECT ENERGY
SERVICES, INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(unaudited)
|
(in thousands,
except share and per share data)
|
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
|
2018
|
|
2017
|
|
2018
|
|
2017
|
|
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water
solutions
|
|
$
|
281,358
|
|
$
|
125,086
|
|
$
|
812,634
|
|
$
|
311,275
|
|
Oilfield
chemicals
|
|
|
63,986
|
|
|
—
|
|
|
192,422
|
|
|
—
|
|
Wellsite
services
|
|
|
51,626
|
|
|
28,794
|
|
|
161,556
|
|
|
76,979
|
|
Total
revenue
|
|
|
396,970
|
|
|
153,880
|
|
|
1,166,612
|
|
|
388,254
|
|
Costs of
revenue
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Water
solutions
|
|
|
208,387
|
|
|
88,087
|
|
|
606,131
|
|
|
226,737
|
|
Oilfield
chemicals
|
|
|
56,473
|
|
|
—
|
|
|
172,057
|
|
|
—
|
|
Wellsite
services
|
|
|
40,860
|
|
|
22,864
|
|
|
131,170
|
|
|
62,852
|
|
Depreciation and
amortization
|
|
|
31,853
|
|
|
23,420
|
|
|
93,180
|
|
|
67,144
|
|
Total costs of
revenue
|
|
|
337,573
|
|
|
134,371
|
|
|
1,002,538
|
|
|
356,733
|
|
Gross
profit
|
|
|
59,397
|
|
|
19,509
|
|
|
164,074
|
|
|
31,521
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
|
25,110
|
|
|
16,087
|
|
|
77,662
|
|
|
49,298
|
|
Depreciation and
amortization
|
|
|
984
|
|
|
375
|
|
|
2,332
|
|
|
1,312
|
|
Impairment of property
and equipment
|
|
|
—
|
|
|
—
|
|
|
2,282
|
|
|
—
|
|
Impairment of
investment
|
|
|
—
|
|
|
—
|
|
|
2,000
|
|
|
—
|
|
Lease abandonment
costs
|
|
|
1,045
|
|
|
590
|
|
|
4,142
|
|
|
2,871
|
|
Total operating
expenses
|
|
|
27,139
|
|
|
17,052
|
|
|
88,418
|
|
|
53,481
|
|
Income (loss) from
operations
|
|
|
32,258
|
|
|
2,457
|
|
|
75,656
|
|
|
(21,960)
|
|
Other income
(expense)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net
|
|
|
(1,322)
|
|
|
(484)
|
|
|
(3,815)
|
|
|
(1,885)
|
|
Foreign currency gain
(loss), net
|
|
|
248
|
|
|
—
|
|
|
(492)
|
|
|
—
|
|
Other income,
net
|
|
|
1,498
|
|
|
326
|
|
|
3,099
|
|
|
3,342
|
|
Income (loss) before
tax expense
|
|
|
32,682
|
|
|
2,299
|
|
|
74,448
|
|
|
(20,503)
|
|
Income tax (expense)
benefit
|
|
|
(1,415)
|
|
|
294
|
|
|
(2,027)
|
|
|
326
|
|
Net income
(loss)
|
|
|
31,267
|
|
|
2,593
|
|
|
72,421
|
|
|
(20,177)
|
|
Less: net (income)
loss attributable to noncontrolling interests
|
|
|
(8,316)
|
|
|
(1,369)
|
|
|
(22,409)
|
|
|
13,013
|
|
Net income (loss)
attributable to Select Energy Services, Inc.
|
|
$
|
22,951
|
|
$
|
1,224
|
|
$
|
50,012
|
|
$
|
(7,164)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class
A—Basic
|
|
$
|
0.29
|
|
$
|
0.04
|
|
$
|
0.69
|
|
$
|
(0.28)
|
|
Class
A-1—Basic
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(0.28)
|
|
Class
A-2—Basic
|
|
$
|
—
|
|
$
|
—
|
|
$
|
0.69
|
|
$
|
—
|
|
Class
B—Basic
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share attributable to common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Class
A—Diluted
|
|
$
|
0.29
|
|
$
|
0.04
|
|
$
|
0.69
|
|
$
|
(0.28)
|
|
Class
A-1—Diluted
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(0.28)
|
|
Class
A-2—Diluted
|
|
$
|
—
|
|
$
|
—
|
|
$
|
0.69
|
|
$
|
—
|
|
Class
B—Diluted
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECT ENERGY
SERVICES, INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(unaudited)
|
(in thousands,
except share data)
|
|
|
|
|
September 30, 2018
|
|
December 31,
2017
|
|
|
(unaudited)
|
|
|
Assets
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
13,050
|
|
$
|
2,774
|
Accounts receivable
trade, net of allowance for doubtful accounts of $2,549 and $2,979,
respectively
|
|
|
422,383
|
|
|
373,633
|
Accounts receivable,
related parties
|
|
|
2,313
|
|
|
7,669
|
Inventories,
net
|
|
|
49,457
|
|
|
44,598
|
Prepaid expenses and
other current assets
|
|
|
20,805
|
|
|
17,842
|
Total current
assets
|
|
|
508,008
|
|
|
446,516
|
Property and
equipment
|
|
|
1,112,138
|
|
|
1,034,995
|
Accumulated
depreciation
|
|
|
(608,040)
|
|
|
(560,886)
|
Property and
equipment, net
|
|
|
504,098
|
|
|
474,109
|
Goodwill
|
|
|
274,753
|
|
|
273,421
|
Other intangible
assets, net
|
|
|
148,327
|
|
|
156,066
|
Other
assets
|
|
|
3,599
|
|
|
6,256
|
Total
assets
|
|
$
|
1,438,785
|
|
$
|
1,356,368
|
Liabilities and
Equity
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
54,437
|
|
$
|
52,579
|
Accounts payable and
accrued expenses, related parties
|
|
|
4,341
|
|
|
2,772
|
Accrued salaries and
benefits
|
|
|
25,614
|
|
|
21,324
|
Accrued
insurance
|
|
|
20,492
|
|
|
12,510
|
Sales tax
payable
|
|
|
5,155
|
|
|
12,931
|
Accrued expenses and
other current liabilities
|
|
|
91,218
|
|
|
81,112
|
Current portion of
capital lease obligations
|
|
|
1,176
|
|
|
1,965
|
Total current
liabilities
|
|
|
202,433
|
|
|
185,193
|
Accrued lease
obligations
|
|
|
18,547
|
|
|
18,979
|
Other long-term
liabilities
|
|
|
10,133
|
|
|
13,827
|
Long-term
debt
|
|
|
65,000
|
|
|
75,000
|
Total
liabilities
|
|
|
296,113
|
|
|
292,999
|
Commitments and
contingencies (Note 9)
|
|
|
|
|
|
|
Class A common
stock, $0.01 par value; 350,000,000 shares authorized and
80,658,534 shares issued and outstanding as of
September 30, 2018; 350,000,000 shares authorized and
59,182,176 shares issued and outstanding as of
December 31, 2017
|
|
|
807
|
|
|
592
|
Class A-2 common
stock, $0.01 par value; 40,000,000 shares authorized, no shares
issued or outstanding as of September 30, 2018;
40,000,000 shares authorized, 6,731,845 shares issued and
outstanding as of December 31, 2017
|
|
|
—
|
|
|
67
|
Class B common
stock, $0.01 par value; 150,000,000 shares authorized and
26,026,843 shares issued and outstanding as of
September 30, 2018; 150,000,000 shares authorized and
40,331,989 shares issued and outstanding as of
December 31, 2017
|
|
|
260
|
|
|
404
|
Preferred stock,
$0.01 par value; 50,000,000 shares authorized and no shares issued
and outstanding as of September 30, 2018 and December 31,
2017
|
|
|
—
|
|
|
—
|
Additional paid-in
capital
|
|
|
828,137
|
|
|
673,141
|
Retained earnings
(accumulated deficit)
|
|
|
32,153
|
|
|
(17,859)
|
Accumulated other
comprehensive (deficit) income
|
|
|
(17)
|
|
|
302
|
Total stockholders'
equity
|
|
|
861,340
|
|
|
656,647
|
Noncontrolling
interests
|
|
|
281,332
|
|
|
406,722
|
Total
equity
|
|
|
1,142,672
|
|
|
1,063,369
|
Total liabilities
and equity
|
|
$
|
1,438,785
|
|
$
|
1,356,368
|
SELECT ENERGY
SERVICES, INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited)
|
|
(in
thousands)
|
|
|
|
|
Nine months ended
September 30,
|
|
|
2018
|
|
2017
|
Cash flows from
operating activities
|
|
|
|
|
|
|
Net income
(loss)
|
|
$
|
72,421
|
|
$
|
(20,177)
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
95,512
|
|
|
68,456
|
Net gain on disposal
of property and equipment
|
|
|
(2,959)
|
|
|
(3,127)
|
Bad debt
expense
|
|
|
1,430
|
|
|
1,098
|
Amortization of debt
issuance costs
|
|
|
516
|
|
|
928
|
Inventory
reserve
|
|
|
430
|
|
|
—
|
Equity-based
compensation
|
|
|
8,030
|
|
|
1,781
|
Impairment of property
and equipment
|
|
|
2,282
|
|
|
—
|
Impairment of
investment
|
|
|
2,000
|
|
|
—
|
Other operating items,
net
|
|
|
971
|
|
|
(560)
|
Changes in operating
assets and liabilities
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
(46,010)
|
|
|
(65,815)
|
Prepaid expenses and
other assets
|
|
|
(7,950)
|
|
|
(6,493)
|
Accounts payable and
accrued liabilities
|
|
|
(2,043)
|
|
|
19,660
|
Net cash provided by
(used in) operating activities
|
|
|
124,630
|
|
|
(4,249)
|
Cash flows from
investing activities
|
|
|
|
|
|
|
Acquisitions, net of
cash received
|
|
|
(1,953)
|
|
|
(62,199)
|
Purchase of property
and equipment
|
|
|
(109,500)
|
|
|
(66,013)
|
Proceeds received from
sale of property and equipment
|
|
|
9,363
|
|
|
6,677
|
Net cash used in
investing activities
|
|
|
(102,090)
|
|
|
(121,535)
|
Cash flows from
financing activities
|
|
|
|
|
|
|
Proceeds from
revolving line of credit and issuance of long-term debt
|
|
|
45,000
|
|
|
34,000
|
Payments on long-term
debt
|
|
|
(55,000)
|
|
|
(34,000)
|
Payments of capital
lease obligations
|
|
|
(1,517)
|
|
|
—
|
Proceeds from initial
public offering
|
|
|
—
|
|
|
140,070
|
Proceeds from share
issuance
|
|
|
731
|
|
|
—
|
Payments incurred for
initial public offering
|
|
|
—
|
|
|
(11,566)
|
Distributions to
noncontrolling interests, net
|
|
|
(506)
|
|
|
(368)
|
Repurchase of common
stock
|
|
|
(877)
|
|
|
—
|
Net cash (used in)
provided by financing activities
|
|
|
(12,169)
|
|
|
128,136
|
Effect of exchange
rate changes on cash
|
|
|
(95)
|
|
|
—
|
Net increase in cash
and cash equivalents
|
|
|
10,276
|
|
|
2,352
|
Cash and cash
equivalents, beginning of period
|
|
|
2,774
|
|
|
40,041
|
Cash and cash
equivalents, end of period
|
|
$
|
13,050
|
|
$
|
42,393
|
Supplemental cash
flow disclosure:
|
|
|
|
|
|
|
Cash paid for
interest
|
|
$
|
3,356
|
|
$
|
1,139
|
Cash (refunds) paid
for income taxes
|
|
$
|
(1,750)
|
|
$
|
37
|
Supplemental
disclosure of noncash investing activities:
|
|
|
|
|
|
|
Capital expenditures
included in accounts payable and accrued liabilities
|
|
$
|
23,689
|
|
$
|
7,733
|
Comparison of Non-GAAP Financial Measures
EBITDA, Adjusted EBITDA, gross profit before depreciation and
amortization (D&A) and gross margin before D&A are not
financial measures presented in accordance with GAAP. We define
EBITDA as net income, plus interest expense, taxes and depreciation
& amortization. We define Adjusted EBITDA as EBITDA
plus/(minus) loss/(income) from discontinued operations, plus any
impairment charges or asset write-offs pursuant to GAAP,
plus/(minus) non-cash losses/(gains) on the sale of assets or
subsidiaries, non-recurring compensation expense, non-cash
compensation expense, and non-recurring or unusual expenses or
charges, including severance expenses, transaction costs, or
facilities-related exit and disposal-related expenditures,
plus/(minus) foreign currency losses/(gains) and plus any inventory
write-downs. We define gross profit before D&A as revenue less
cost of revenue, excluding cost of sales D&A expense. We define
gross margin before D&A as gross profit before D&A divided
by revenue. EBITDA, Adjusted EBITDA, gross profit before D&A
and gross margin before D&A are supplemental non-GAAP financial
measures that we believe provide useful information to external
users of our financial statements, such as industry analysts,
investors, lenders and rating agencies because it allows them to
compare our operating performance on a consistent basis across
periods by removing the effects of our capital structure (such as
varying levels of interest expense), asset base (such as
depreciation and amortization) and non-recurring items outside the
control of our management team. We present EBITDA, Adjusted EBITDA,
gross profit before D&A and gross margin before D&A because
we believe they provide useful information regarding the factors
and trends affecting our business in addition to measures
calculated under GAAP.
Net income is the GAAP measure most directly comparable to
EBITDA and Adjusted EBITDA. Gross profit is the GAAP measure most
directly comparable to gross profit before D&A. Our non-GAAP
financial measures should not be considered as alternatives to the
most directly comparable GAAP financial measure. Each of these
non-GAAP financial measures has important limitations as an
analytical tool due to exclusion of some but not all items that
affect the most directly comparable GAAP financial measures. You
should not consider EBITDA, Adjusted EBITDA or gross profit before
D&A in isolation or as substitutes for an analysis of our
results as reported under GAAP. Because EBITDA, Adjusted EBITDA and
gross profit before D&A may be defined differently by other
companies in our industry, our definitions of these non-GAAP
financial measures may not be comparable to similarly titled
measures of other companies, thereby diminishing their utility. For
further discussion, please see "Item 6. Selected Financial Data" in
our Annual Report on Form 10-K for the year ended December 31, 2017.
The following tables present a reconciliation of EBITDA and
Adjusted EBITDA to our net income (loss), which is the most
directly comparable GAAP measure for the periods presented:
|
|
Three months
ended,
|
|
|
September 30, 2018
|
|
June 30,
2018
|
|
September 30, 2017
|
|
|
(unaudited)
|
|
|
(in thousands)
|
Net income
(loss)
|
|
$
|
31,267
|
|
$
|
25,023
|
|
$
|
2,593
|
Interest
expense
|
|
|
1,322
|
|
|
1,342
|
|
|
484
|
Income tax expense
(benefit)
|
|
|
1,415
|
|
|
150
|
|
|
(294)
|
Depreciation and
amortization
|
|
|
32,837
|
|
|
31,252
|
|
|
23,795
|
EBITDA
|
|
|
66,841
|
|
|
57,767
|
|
|
26,578
|
Impairment of property
and equipment
|
|
|
—
|
|
|
2,282
|
|
|
—
|
Lease abandonment
costs
|
|
|
1,045
|
|
|
1,973
|
|
|
590
|
Non-recurring severance
expenses
|
|
|
495
|
|
|
—
|
|
|
—
|
Non-recurring
transaction costs
|
|
|
2,645
|
|
|
2,481
|
|
|
4,382
|
Non-cash compensation
expenses
|
|
|
2,565
|
|
|
2,984
|
|
|
549
|
Non-cash loss on sale
of assets or subsidiaries
|
|
|
315
|
|
|
249
|
|
|
268
|
Foreign currency gain
(loss)
|
|
|
(248)
|
|
|
340
|
|
|
—
|
Inventory
write-downs
|
|
|
36
|
|
|
128
|
|
|
—
|
Adjusted
EBITDA
|
|
$
|
73,694
|
|
$
|
68,204
|
|
$
|
32,367
|
The following tables present a reconciliation of gross profit
before D&A to total gross profit, which is the most directly
comparable GAAP measure, and a calculation of gross margin before
D&A for the periods presented:
|
|
Three months
ended,
|
|
|
|
September 30,
2018
|
|
June 30,
2018
|
|
|
|
(unaudited)
|
|
|
|
(in
thousands)
|
|
Gross profit by
segment
|
|
|
|
|
|
|
|
Water
solutions
|
|
$
|
49,423
|
|
$
|
48,453
|
|
Oilfield
chemicals
|
|
|
5,398
|
|
|
3,484
|
|
Wellsite
services
|
|
|
4,576
|
|
|
4,791
|
|
As reported gross
profit
|
|
|
59,397
|
|
|
56,728
|
|
|
|
|
|
|
|
|
|
Plus depreciation and
amortization
|
|
|
|
|
|
|
|
Water
solutions
|
|
|
23,548
|
|
|
21,599
|
|
Oilfield
chemicals
|
|
|
2,115
|
|
|
2,823
|
|
Wellsite
services
|
|
|
6,190
|
|
|
6,023
|
|
Total Depreciation and
amortization
|
|
|
31,853
|
|
|
30,445
|
|
|
|
|
|
|
|
|
|
Gross profit before
D&A
|
|
|
91,250
|
|
|
87,173
|
|
|
|
|
|
|
|
|
|
Gross Profit before
D&A by segment
|
|
|
|
|
|
|
|
Water
solutions
|
|
|
72,971
|
|
|
70,052
|
|
Oilfield
chemicals
|
|
|
7,513
|
|
|
6,307
|
|
Wellsite
services
|
|
|
10,766
|
|
|
10,814
|
|
Total gross profit
before D&A
|
|
$
|
91,250
|
|
$
|
87,173
|
|
|
|
|
|
|
|
|
|
Gross Margin before
D&A by segment
|
|
|
|
|
|
|
|
Water
solutions
|
|
|
25.9%
|
|
|
25.6%
|
|
Oilfield
chemicals
|
|
|
11.7%
|
|
|
9.7%
|
|
Wellsite
services
|
|
|
20.9%
|
|
|
19.8%
|
|
Total gross margin
before D&A
|
|
|
23.0%
|
|
|
22.2%
|
|
Contacts:
|
Select Energy
Services
|
|
Chris George - VP,
Investor Relations & Treasurer
|
|
(713)
296-1073
|
|
IR@selectenergyservices.com
|
|
|
|
Dennard Lascar
Investor Relations
|
|
Ken Dennard / Lisa
Elliott
|
|
713-529-6600
|
|
WTTR@dennardlascar.com
|
View original
content:http://www.prnewswire.com/news-releases/select-energy-services-reports-third-quarter-2018-financial-and-operational-results-300745149.html
SOURCE Select Energy Services, Inc.